On January 8, 2016, the Seventh Circuit Court of Appeals reversed the district court's entry of judgment in favor of the Bank of New York and against GLG client Frederick J. Grede, the trustee of Sentinel Management Group, Inc. The case, originally tried by GLG partners Chris Gair and Jeff Eberhard while at Jenner & Block, was part of a larger constellation of litigation they led stemming from the collapse of Sentinel, a cash manager and investment advisor, in August 2007. With the victory against the Bank, the trustee's litigation team has recovered over $260 million for Sentinel's customers.

Investigation following Sentinel's collapse revealed a massive fraud its insiders committed against Sentinel's customers, which were futures commission merchants, hedge funds, and others who had given Sentinel excess cash to invest in liquid and secure investments. Sentinel was obligated by federal law and its contracts with customers to hold all customer assets in segregated accounts. Rather than doing so, Sentinel instead pledged hundreds of millions of dollars in customer assets as collateral for a loan from the Bank of New York, which Sentinel then used to make massive leveraged investments in risky, illiquid CDOs.

At the time of its collapse, Sentinel owed the Bank of New York over $300 million, which loan was secured with customer assets that should have been held in segregation. The Trustee sued the Bank of New York in 2008 to avoid Sentinel's pledges of customer securities as fraudulent transfers under Section 548(a) of the Bankruptcy Code. After a 17-day bench trial in 2010, the district court entered judgment in favor of the Bank of New York. The Seventh Circuit reversed, holding that the Trustee had proved that Sentinel's transfers of customer securities to the Bank of New York were made with intent to defraud, hinder, or delay customers. On remand, the district court again entered judgment in favor of the Bank of New York, holding that the bank had accepted the transfers in "good faith" under Section 548(c).

In its January 8, 2016 opinion, the Seventh Circuit again reversed, holding that at trial, the Trustee had proved and extensive evidence supported that the Bank of New York was on inquiry notice of Sentinel's fraud, and thus could not retain its secured claim. As a result of the ruling, the Bank of New York no longer has priority over Sentinel's customers and must relinquish its secured claim in over $300 million in collateral, representing a net recovery of approximately $150 million for Sentinel's customers. As a result of litigation efforts led by GLG partners Chris Gair and Jeff Eberhard along with their colleagues at Jenner & Block, customers have now recouped close to 60% of their losses.